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First Pillar

The table shows the three policies grouped together in the first pillar: market interventions, coupled subsidies and direct income support. For each of them, the objectives and main instruments are presented together with the funds they receive. The 2009 overall budget for the first pillar (European Agricultural Guarantee Fund) amounted to EUR 41,131 million.

Policy Objectives Main Instruments 2009 Expenditure
Market Interventions Raise and stabilise market prices Intervention buying;
export subsidies
3,410
Coupled Subsidies Increase production of selected goods Production premia;
area payments
4,846
Direct Income Support Reward farmers' historic support entitlements Single Farm Payment;
Single Area Payment
31,295

Market intervention and coupled subsidies are the most harmful policies. They strongly distort the European economy and harm foreign farmers. However, their importance has shrunk over time and the Single Farm Payment (SFP) has become the key problem.

  • The Single Farm Payment (SFP) reduces Europes’s economic prosperity because it binds resources in agriculture that could be used more productively in other sectors. The burden of financing and administering these wasteful subsidies also weighs on the economy.
  • Its uneven distribution across member states hampers fair competition on the internal market.
  • Only a share of the money props up farm income, while the rest ends up in the hands of land owners. An even smaller share reaches poor farmers. And, in any case, social policies should be targeted at poverty and not favor farmers.
  • The SFP is not a useful tool to stimulate rural development can be better promoted through investments in infrastructure and education facilities.
  • The SFP, which goes even to highly fertile areas, is much less efficient in ensuring the continuation of land management than targeted payments in areas where land abandonment is actually a problem.
  • The SFP does very little for environmental protection or food safety and animal welfare. The so-called cross-compliance requirements are ineffective.
  • The SFP does not enhance food security in the EU. It does not help to preserve productive resources, such as water, soil, biodiversity, and genetic variety in plants and animals.
  • The SFP is a burden on European integration. Less money can be spent in areas where the EU creates real value added, such as in transborder infrastructure or internal and external security.
  • The SFP does not mitigate world hunger and poverty. Instead, investments in agricultural research and development in developing countries are needed.

While the SFP should be phased out until 2020, some transition payment may be needed (Transition strategies for the SFP).